Thursday, January 15, 2009

Russia Cuts Off The Natural Gas (Again) To EU & Ukraine

Natural gas price disputes and geopolitics have led Russia to cut off natural gas deliveries to Ukraine ad the European Union (EU). The shut occurred when Ukraine threatened to tap Russia's EU-bound gas exports. Russia's natural gas monopoly, Gazprom, cut off Ukraine on January 1, 2009 in a dispute over what price Ukraine shuold pay. The EU gets about 80% of its Russian gas imports via Ukraine, accounting for about 20% of the 27-nation bloc's consumption.

The Gazprom-Ukraine dispute has cut EU gas imports by 30%. There was a similar standoff in 2006. It could take up to 36 hours for natural gas to get to the EU when it is turned back on. Gazprom claims Ukraine owes about $700 million in payments. Europe needs to develop other resources in order to reduce its dependence on Russian natural gas.

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